[Congressional Bills 111th Congress]
[From the U.S. Government Publishing Office]
[S. 3892 Introduced in Senate (IS)]

111th CONGRESS
  2d Session
                                S. 3892

 To amend the Internal Revenue Code of 1986 to provide tax benefits to 
           individuals who have been wrongfully incarcerated.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                           September 29, 2010

Mr. Schumer (for himself and Mr. Cornyn) introduced the following bill; 
     which was read twice and referred to the Committee on Finance

_______________________________________________________________________

                                 A BILL


 
 To amend the Internal Revenue Code of 1986 to provide tax benefits to 
           individuals who have been wrongfully incarcerated.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Wrongful Convictions Tax Relief Act 
of 2010''.

SEC. 2. EXCLUSION FOR WRONGFULLY INCARCERATED INDIVIDUALS.

    (a) In General.--Part III of subchapter B of chapter 1 of the 
Internal Revenue Code of 1986 is amended by inserting after section 
139C the following new section:

``SEC. 139D. CERTAIN AMOUNTS RECEIVED BY WRONGFULLY INCARCERATED 
              INDIVIDUALS.

    ``(a) Exclusion From Gross Income.--Gross income shall not 
include--
            ``(1) in the case of any wrongfully incarcerated 
        individual, any civil damages, restitution, or other monetary 
        award (including compensatory or statutory damages and 
        restitution imposed in a criminal matter) relating to the 
        incarceration of such individual for the covered offense for 
        which such individual was convicted, and
            ``(2) in the case of a qualified wrongfully incarcerated 
        individual, the first $50,000 of income received by such 
        individual in any taxable year beginning after December 31, 
        2009.
    ``(b) Limitation Relating to Income Exclusion.--
            ``(1) In general.--The exclusion under subsection (a)(2) 
        shall not apply to any qualified wrongfully incarcerated 
        individual for any taxable year other than a taxable year in 
        the qualified benefit period with respect to such individual.
            ``(2) Qualified benefit period.--For purposes of paragraph 
        (1), the term `qualified benefit period' means, with respect to 
        any qualified wrongfully incarcerated individual, the first 15 
        taxable years ending after the first date on which such 
        individual is a wrongfully incarcerated individual.
            ``(3) Limitation based on years of incarceration.--In the 
        case of a qualified wrongfully incarcerated individual who 
        served a sentence of imprisonment of less than 15 years for the 
        covered offense with respect to which such individual is a 
        qualified wrongfully incarcerated individual, the number of 
        full years that such individual was so imprisoned shall be 
        substituted for `15' in paragraph (2).
            ``(4) Termination of exclusion upon conviction of 
        subsequent offense.--If a qualified wrongfully incarcerated 
        individual is convicted of a criminal offense under Federal or 
        State law that is punishable by more than 1 year imprisonment 
        at any time during the qualified benefit period, subsection 
        (a)(2) shall not apply to the taxable year which includes the 
        date of such conviction and all subsequent taxable years.
    ``(c) Wrongfully Incarcerated Individual.--For purposes of this 
section--
            ``(1) In general.--The term `wrongfully incarcerated 
        individual' means an individual--
                    ``(A) who was convicted of a covered offense,
                    ``(B) who served all or part of a sentence of 
                imprisonment relating to that covered offense, and
                    ``(C)(i) who was pardoned, granted clemency, or 
                granted amnesty for that covered offense because that 
                individual was innocent of that covered offense, or
                    ``(ii)(I) for whom the judgment of conviction for 
                that covered offense was reversed or vacated, and
                    ``(II) for whom the indictment, information, or 
                other accusatory instrument for that covered offense 
                was dismissed or who was found not guilty at a new 
                trial after the judgment of conviction for that covered 
                offense was reversed or vacated.
            ``(2) Covered offense.--The term `covered offense' means 
        any criminal offense under Federal or State law, and includes 
        any criminal offense arising from the same course of conduct as 
        that criminal offense.
    ``(d) Qualified Wrongfully Incarcerated Individual.--For purposes 
of this section, the term `qualified wrongfully incarcerated 
individual' means a wrongfully incarcerated individual who, except for 
the covered offense described in subsection (c)(1)(A), has never been 
convicted of a criminal offense (other than a juvenile offense) under 
Federal or State law that is punishable by more than 1 year 
imprisonment.
    ``(e) Reporting Requirements.--For purposes of this section and 
section 36B, the Secretary shall impose such reporting requirements as 
the Secretary determines necessary or appropriate to carry out this 
section, including a requirement that the individual include with the 
return of tax for the taxable year a statement or attestation that the 
individual has not been subsequently convicted of a crime within the 
meaning of subsection (b)(4).''.
    (b) Conforming Amendment.--The table of sections for part III of 
subchapter B of chapter 1 of the Internal Revenue Code of 1986 is 
amended by inserting after the item relating to section 139B the 
following new item:

``Sec. 139D. Certain amounts received by wrongfully incarcerated 
                            individuals.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning before, on, or after the date of the 
enactment of this Act.

SEC. 3. REFUNDABLE CREDIT FOR EMPLOYMENT TAXES PAID BY WRONGFULLY 
              INCARCERATED INDIVIDUALS.

    (a) Allowance of Refundable Credit.--Subpart C of part IV of 
subchapter A of chapter 1 of the Internal Revenue Code of 1986 
(relating to refundable credits) is amended by inserting after section 
36A the following new section:

``SEC. 36B. EMPLOYMENT TAXES OF WRONGFULLY INCARCERATED INDIVIDUALS.

    ``(a) In General.--In the case of a qualified wrongfully 
incarcerated individual, there shall be allowed as a credit against the 
tax imposed by this subtitle for the taxable year an amount equal to 
the sum of--
            ``(1) 50 percent of the taxes imposed on the self-
        employment income of such individual under subsections (a) and 
        (b) of section 1401 during the taxable year, plus
            ``(2) the taxes imposed on the wages received by such 
        individual with respect to employment under subsections (a) and 
        (b) of section 3101 during the taxable year.
    ``(b) Limitations.--
            ``(1) Dollar limitation.--The total amount of wages and 
        self-employment income taken into account under subsection (a) 
        with respect to any individual for any taxable year shall not 
        exceed $50,000.
            ``(2) Taxable year limitation.--The credit under subsection 
        (a) shall not be allowed to any qualified wrongfully 
        incarcerated individual for any taxable year other than a 
        taxable year in the qualified benefit period determined with 
        respect to such individual under paragraphs (2) and (3) of 
        section 139D(b).
            ``(3) Termination of credit upon conviction of subsequent 
        offense.--If a qualified wrongfully incarcerated individual is 
        convicted of a criminal offense under Federal or State law that 
        is punishable by more than 1 year imprisonment at any time 
        during the qualified benefit period (as so determined), 
        subsection (a) shall not apply to the taxable year which 
        includes the date of such conviction and all subsequent taxable 
        years.
    ``(c) Qualified Wrongfully Incarcerated Individual.--For purposes 
of this section, the term `qualified wrongfully incarcerated 
individual' has the meaning given to such term under section 139D(d).
    ``(d) Reference.--For reporting requirement, see section 
139D(e).''.
    (b) Conforming Amendments.--
            (1) Section 1324(b)(2) of title 31, United States Code, is 
        amended by inserting ``, 36B,'' after ``36A,''.
            (2) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of the Internal Revenue Code of 1986 
        is amended by inserting after the item relating to section 36A 
        the following new item:

``Sec. 36B. Employment taxes of wrongfully incarcerated individuals.''.
    (c) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2009.
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